12. Stock-based Compensation

From time to time, the Company grants stock
options and restricted stock awards to directors, officers and employees. These awards are valued at the grant date by determining
the fair value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis
over the requisite service period.

Stock Options

The following table summarizes stock option
activity for the nine months ended June 30, 2018:

Number of

shares

Weighted

Average

Exercise

Price

Weighted

Average

Remaining Contractual Life

Intrinsic Value

Outstanding at September 30, 2017

211,668

$

13.19

3.47

$

454,417

Granted

20,000

32.24

10.00

Exercised

-

Forfeited

-

Outstanding at June 30, 2018

231,668

$

14.84

3.29

$

471,458

Exercisable at June 30, 2018

187,167

$

11.75

2.33

$

471,458

The Company recognized compensation expense
of $49,817 and $67,491 during the three months ended June 30, 2018 and 2017, respectively. The Company recognized compensation
expense of $447,970 and $137,011 during the nine months ended June 30, 2018 and 2017, respectively, related to stock option and
warrant extension awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated
forfeitures.

At June 30, 2018, the Company has $335,992 of
unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects
to recognize as compensation expense through October of 2022.

The exercise price for stock options outstanding
and exercisable outstanding at June 30, 2018 is as follows:

Outstanding

Exercisable

Number of

Exercise

Number of

Exercise

Options

Price

Options

Price

31,250

$

5.00

31,250

$

5.00

25,000

7.50

25,000

7.50

31,250

10.00

31,250

10.00

4,167

10.86

4,167

10.86

4,167

10.86

4,167

10.86

4,167

10.86

6,250

12.50

6,250

12.50

6,250

15.00

6,250

15.00

75,000

15.18

75,000

15.18

8,000

23.41

8,000

15.18

8,000

27.60

8,000

31.74

8,000

36.50

8,000

41.98

231,668

187,167

The following table summarizes information about
the Company’s non-vested shares outstanding as of June 30, 2018:

Non-vested Shares

Number of

Shares

Weighted

Average

Grant-Date

Fair Value

Non-vested at September 30, 2017

36,668

$

17.70

Granted

20,000

$

10.14

Vested

(12,167

)

$

13.32

Non-vested at June 30, 2018

44,501

$

13.54

Options were granted during fiscal 2017 and
2016, where the exercise price was less than the common stock price at the date of grant or where the exercise price was greater
than the common stock price at the date of grant. There have been no options granted in fiscal 2018 to date. The assumptions used
in calculating the fair value of stock options granted use the Black-Scholes option pricing model for options granted were as follows: